Positive Signs for Sony’s PlayStation Vita

The handheld gaming console with mobile access sells well in the early going. Now the challenge is to sustain the momentum

One of the more closely watchedgame–device rollouts, for Sony’s (NYSE:SNE) PlayStation Vita handheld, had “exceeded expectations,” as Sony put it, since the device’s rollout, which included a Dec. 17 launch in Japan and a launch on Feb. 22 in other markets including the U.S. Sales topped 1.2 million units as of Feb. 26, according to the company, and benefited from a solid lineup of available video games designed for the console.

Sony said software sales at retailers and through the online PlayStation Network have topped 2 million. There were 25 titles available at launch for PlayStation Vita, which can play both high-definition titles that require use of the handheld’s traditional console controls and, via its mobile-access hardware, downloadable games that can be played using Vita’s touchscreen.

Given the current drift toward mobile and online games, that may be considered a decent start for Vita, which is priced at $250 for a WiFi-only version and $300 for a WiFi version with 3G compatibility. The device can be serviced with a 250MB data-download account for $15 a month through AT&T (NYSE:T), or a 3GB account for $30 a month. Flash memory cards, which are required for downloads, start at about $20.

Inevitably, Vita will be compared to Nintendo’s (PINK:NTDOY) 3DS, which launched with a $250 price tag early last year and sold more than 15 million units by the time the holiday season was over. That performance included, however, a price drop, to $170, a few months after the 3DS initial launch. It’s still in the early going for the PlayStation Vita, so it’s not yet clear what the sales pace will be now that the machine is available worldwide, or when Sony might be forced to lower the price to sustain sales volume.

A fighting chance

Time magazine’s Techland column notes projections by Strategy Analytics that put Vita sales at about 12 million units in 2012, assuming a price drop somewhere along the way. Not bad. But the gaming landscape continues to shift as the smartphone population and opportunities for gaming on smartphones continue to grow. More than 100 million Apple (NASDAQ:AAPL) iPhones were activated last year, and smartphones operating on Google’s (NASDAQ:GOOG) Android platform are being powered up at a rate of 850,000 per day worldwide. Industry experts estimate that 88% of smartphone owners use the devices to play games.

Set-top console sales, meanwhile, are steadily dropping, with January sales in the U.S. down nearly 40% year over year, partly because of a weak lineup of new titles. Revenue from set-top consoles such as Microsoft’s (NASDAQ:MSFT) Xbox 360, Sony’s PlayStation 3, and Nintendo’s Wii fell 38% in January, to just under $200 million from $324 million a year ago.

But if the Vita does in fact sell 12 million units in 2012, it would suggest there’s still a fairly solid market for dedicated gaming handhelds. Too, the story lines and video quality of many games offered on smartphones are no match for the lineup of high-definition games available for the Vita. That creates opportunities for Sony and game developers like Blizzard Activision (NASDAQ:ATVI) and Electronic Arts (NASDAQ:EA), which are hoping to entice a new generation of gamers into trying the developers’ more elaborate and visually engaging offerings. Even if the Vita can’t break the grip that free and cheap mobile games have on the video game industry, there still is a chance it could loosen that grip.